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On December 28, 2001, the President signed an Executive order to implement the January 2002 pay adjustments. (See Text or PDF version of Attachment 1) Section 646 of the Treasury and General Government Appropriations Act, 2002 (Public Law 107-67, November 12, 2001), authorized a 4.6 percent overall average pay increase for General Schedule employees. This memorandum reviews relevant portions of the Executive order and provides general information on the 2002 pay adjustments for the General Schedule and certain other pay systems and schedules.

2002 Salary Tables and Effective Date

We have posted the 2002 salary tables discussed in this memorandum on the Office of Personnel Management's Web site at http://www.opm.gov/oca/payrates/index.htm. The 2002 increased rates of pay will become effective on the first day of the first applicable pay period beginning on or after January 1, 2002.

The General Schedule and Other Statutory Pay Systems

The Executive order provides for an across-the-board increase of 3.6 percent in the rates of basic pay for the statutory pay systems--the General Schedule (GS), the Foreign Service Schedule, and certain schedules for the Veterans Health Administration of the Department of Veterans Affairs.

The Senior Executive Service and the Executive Schedule

The Executive order reflects a decision by the President to increase the rates of basic pay for members of the Senior Executive Service (SES) by 3.6 percent (rounded to the nearest $100) at levels ES-1 through ES-3 and by 3.4 percent (rounded to the nearest $100) at levels ES-4 through ES-6. The maximum rate of basic pay for SES members is limited by law to the rate for level IV of the Executive Schedule, which will increase to $130,000. By law (5 U.S.C. 5318), the rates for levels I through V of the Executive Schedule (EX-I through EX-V) will increase by 3.4 percent (rounded to the nearest $100).

Administrative Law Judges

Under 5 U.S.C. 5372, the President may adjust the rates of basic pay for administrative law judges (ALJs) at the time of a pay increase for the statutory pay systems. The Executive order reflects a decision by the President to increase the rates of basic pay for ALJs at levels AL-2 and AL-3 by approximately 5.4 percent (rounded to the nearest $100). The rate of basic pay for AL-1 will increase by approximately 3.4 percent, since that rate is capped at the rate of basic pay for level IV of the Executive Schedule.

Administrative Appeals Judges

Public Law 106-554, December 21, 2000, amended 5 U.S.C. 5372b to authorize the heads of Executive agencies to fix the rates of basic pay for administrative appeals judge (AAJ) positions at a rate not less than the minimum rate of basic pay for level AL-3 ($86,500 in 2002) and not more than the maximum rate of basic pay for level AL-3 ($119,700 in 2002) of the ALJ pay system established under 5 U.S.C. 5372. On December 11, 2001, OPM issued interim regulations (66 FR 63906), to link the structure of the AAJ pay system directly to the structure for level AL-3 of the ALJ pay system.

OPM's regulations establish six rates of basic pay for the AAJ pay system—AA-1, 2, 3, 4, 5, and 6. These rates correspond to the rates of basic pay for AL-3/A, B, C, D, E, and F of the ALJ pay system under 5 U.S.C. 5372, as shown in the following table:

AAJ Pay Level

ALJ Pay Level

Rate of Basic Pay in 2002

AA-1

AL-3/A

$86,500

AA-2

AL-3/B

$93,100

AA-3

AL-3/C

$99,800

AA-4

AL-3/D

$106,500

AA-5

AL-3/E

$113,100

AA-6

AL-3/F

$119,700

Other Positions Linked to Executive Schedule Pay Levels

Pay rates for certain other employees are linked to the Executive Schedule. The rates of basic pay for Board of Contract Appeals (BCA) members are calculated as a percentage of the rate for level IV of the Executive Schedule. (See 5 U.S.C. 5372a.) Therefore, BCA rates of basic pay will increase by approximately 3.4 percent.

The maximum rate of basic pay for senior-level (SL) and scientific or professional (ST) positions will increase by approximately 3.4 percent (to $130,000). The minimum rate of basic pay for SL/ST positions is equal to 120 percent of the minimum rate of basic pay for GS-15 and thus will increase by 3.6 percent (to $99,096) based on the 3.6 percent across-the-board GS basic pay adjustment. Subject to these minimum and maximum rates, pay adjustments for SL/ST employees are determined by the employing agency. (See 5 U.S.C. 5376.

Locality Payments

The President's Executive order establishes the amounts of the 2002 locality payments for GS employees. On December 6, 2001, the President's Pay Agent (the Secretary of Labor, the Director of the Office of Management and Budget, and the Director of the Office of Personnel Management) extended the 2002 locality payments to the same Governmentwide and single-agency categories that were authorized to receive the 2001 locality payments. (See the President's Pay Agent memorandum to agency heads.) The Governmentwide categories include the SES, employees in SL/ST positions, ALJs, AAJs, BCA members, the Foreign Service, and the Senior Foreign Service. The maximum locality rate of pay for these employees is the rate for level III of the Executive Schedule ($138,200 in 2002). (By law, Executive Schedule officials are not authorized to receive locality pay.)

The locality pay areas for 2002 are unchanged from 2001. There are 32 locality pay areas, including the "Rest of U.S." locality pay area. We have posted the definitions of the 2002 locality pay areas on OPM's Web site at http://www.opm.gov/oca/payrates/index.htm. With this memorandum, we are providing a list of the 2002 locality pay percentages for the 32 locality pay areas, as well as the net percentage increase in each area (reflecting the combined effect of the 3.6 percent across-the-board increase and the applicable increase in the locality pay percentage rate). (See Attachment 2.) Also provided is a chart showing an example of how the 2002 locality rate and net increase is computed for an employee in the "Rest of U.S." locality pay area. (See Text or PDF version of Attachment 3.)

2001 Annual Review of Special Salary Rates

In a separate memorandum (CPM 2001-16), OPM announced the results of the 2001 annual review of existing special salary rates. Most employees covered by an existing special rate schedule will receive a 3.6 percent pay increase.

IGA Continued Rates

Certain employees in the former interim geographic adjustment (IGA) areas are entitled to a "continued rate" under 5 CFR part 531, subpart G. These continued rates were established in January 1994, when our regulations were revised to discontinue the practice of paying IGAs on top of nationwide or worldwide special rates. At the time of the January 2002 general pay increase, an IGA continued rate will be increased by the dollar amount of the increase in the employee's underlying GS rate. (See 5 CFR 531.703.) Since a continued rate is a form of saved pay, it is not affected by other pay actions, such as within-grade increases or promotions.

Law Enforcement Officers

We have prepared separate locality or geographic salary tables for law enforcement officers (LEOs) in each locality pay area. These tables incorporate the statutory worldwide law enforcement special rates for grades GS-3 through GS-10 (Special Rate Table No. 491), which are used as the basis for computing any locality or other geographic payment. While LEOs are entitled to the same locality pay percentages that apply to other GS employees, special LEO geographic pay adjustments of 16 percent continue to apply to LEOs in two metropolitan areas: New York and Boston. (Note: The locality pay percentage for Los Angeles in 2002 (16.05 percent) is higher than the special LEO geographic pay adjustment of 16 percent. Therefore, LEOs in the Los Angeles locality pay area will receive the higher locality pay percentage (16.05 percent). The LEO special geographic adjustment in Los Angeles will terminate on the first day of the first applicable pay period beginning on or after January 1, 2002.)

LEOs covered by the SES or SL/ST pay systems generally are entitled to the locality rates of pay shown in salary tables 2002-ES (LOC) or 2002-SL/ST (LOC), respectively. However, since LEOs covered by these pay systems in New York and Boston also are entitled to special pay adjustments for LEOs, these rates of pay are provided in salary tables 2002-ES (LEO) and 2002-SL/ST (LEO).

Certain law enforcement officers are entitled to a "continued rate" under 5 CFR 531.307 (established in January 1994 when our regulations were revised to discontinue the practice of paying LEO geographic adjustments on top of nationwide or worldwide special rates). As with IGA continued rates, at the time of the January 2002 across-the-board pay increase, an LEO continued rate will be increased by the dollar amount of the increase in the law enforcement officer's underlying GS rate. (See 5 CFR 531.307(b).)

Order for Processing Pay Actions

The general pay adjustments that take effect on the first day of the first pay period beginning in January 2002 must be processed before any individual pay action (e.g., a within-grade increase or promotion) that takes effect on the same date. General pay adjustments include across-the-board increases under 5 U.S.C. 5303, increases in locality payments or other geographic adjustments, special rate increases, increases in retained rates, and increases in continued rates under 5 CFR 531.703 or 531.307. If multiple individual pay actions become effective on the date of the January 2002 pay adjustment, those actions must be processed in the order that satisfies the simultaneous action rule in 5 CFR 531.203(f).

Pay Administration

To assist agencies in administering pay as a result of the 2002 pay adjustments for GS employees, we are providing examples of pay computations in a variety of situations. (See Attachment 4.)

Salary Tables for 2002

The Government Printing Office will publish the "Salary Tables for 2002" book in early 2002. The salary table book will provide the 2002 salary tables, locality pay tables (including hourly rate tables), and detailed information on administering locality rates of pay, calculating rates of pay, maximum limitations on pay, and deductions for benefits.

The Internal Revenue Service (IRS) Publication 15, Circular E, Employer's Tax Guide (revised January 2002), will show the 2002 wage bracket income tax withholding tables for both single and married persons who are paid on a biweekly basis. IRS will mail Publication 15 to employers, and this publication also should be available at IRS offices in December 2001. (Call 1-800-829-3676 to order copies.) IRS publications may be downloaded from the IRS Internet Web site at http://www.irs.gov/forms_pubs/index.html.

Questions

For further information, please contact OPM's Pay and Leave Administration Division by calling (202) 606-2858 or sending an email message to payleave@opm.gov.

By the authority vested in me as President by the Constitution and the laws of the United Statesof America, including the laws cited herein, it is hereby ordered as follows:

Section 1. Statutory Pay Systems. The rates of basic pay or salaries of the statutory paysystems (as defined in 5 U.S.C. 5302(1)), as adjusted under 5 U.S.C. 5303(a), are set forth on theschedules attached hereto and made a part hereof:(a) The General Schedule (5 U.S.C. 5332(a)) at Schedule 1;(b) The Foreign Service Schedule (22 U.S.C. 3963) at Schedule 2; and(c) The schedules for the Veterans Health Administration of the Department of Veterans Affairs(38 U.S.C. 7306, 7404; section 301(a) of Public Law 102-40) at Schedule 3.

Sec. 2. Senior Executive Service. The rates of basic pay for senior executives in the SeniorExecutive Service, as adjusted under 5 U.S.C. 5382, are set forth on Schedule 4 attached hereto andmade a part hereof.

Sec. 3. Executive Salaries. The rates of basic pay or salaries for the following offices andpositions are set forth on the schedules attached hereto and made a part hereof:(a) The Executive Schedule (5 U.S.C. 5312-5318) at Schedule 5;(b) The Vice President (3 U.S.C. 104) and the Congress (2 U.S.C. 31) at Schedule 6; and(c) Justices and judges (28 U.S.C. 5, 44(d), 135, 252, and 461(a)) at Schedule 7.

Sec. 4. Uniformed Services. Pursuant to section 601 of S. 1438, the National DefenseAuthorization Act for Fiscal Year 2002 (which I signed into law on December 28, 2001), the rates ofmonthly basic pay (37 U.S.C. 203(a)) for members of the uniformed services and the rate of monthlycadet or midshipman pay (37 U.S.C. 203(c)) are set forth on Schedule 8 attached hereto and made apart hereof.

Sec. 5. Locality-Based Comparability Payments. (a) Pursuant to sections 5304 and5304a of title 5, United States Code, and in accordance with section 646(a) of the Treasury andGeneral Government Appropriations Act, 2002, Public Law 107-67, locality-based comparabilitypayments shall be paid in accordance with Schedule 9 attached hereto and made a part hereof.

(b) The Director of the Office of Personnel Management shall take such actions as may benecessary to implement these payments and to publish appropriate notice of such payments in theFederal Register.

Sec. 6. Administrative Law Judges. The rates of basic pay for administrative law judges, asadjusted under 5 U.S.C. 5372(b)(4), are set forth on Schedule 10 attached hereto and made a parthereof.

Sec. 7. Effective Dates. Schedule 8 is effective on January 1, 2002. The other schedulescontained herein are effective on the first day of the first applicable pay period beginning on or afterJanuary 1, 2002.

* This schedule does not apply to the Assistant Under Secretary for NursingPrograms or the Director of Nursing Services. Pay for these positions isset by the Under Secretary for Health under 38 U.S.C. 7451.

** Pursuant to section 7404(d)(1) of title 38, United States Code, the rate ofbasic pay payable to this employee is limited to the rate for level IV of theExecutive Schedule, which is $130,000.

*** Pursuant to section 7404(d)(2) of title 38, United States Code, the rate ofbasic pay payable to these employees is limited to the rate for level V of theExecutive Schedule, which is $121,600.

**** Pursuant to section 301(a) of Public Law 102-40, these positions are paidaccording to the Nurse Schedule in 38 U.S.C. 4107(b) as in effect on August 14, 1990,with subsequent adjustments.

SCHEDULE 4--SENIOR EXECUTIVE SERVICE

(Effective on the first day of the first applicable pay periodbeginning on or after January 1, 2002)

* Basic pay for these officers is limited to the rate of basic pay for level III of the Executive Schedule, which is $11,516.70 per month.

** For officers serving as Chairman or Vice Chairman of the Joint Chiefs of Staff, Chief of Staff of the Army, Chief of Naval Operations, Chief of Staff of the Air Force, Commandant of the Marine Corps, or Commandant of the Coast Guard, basic pay for this grade is calculated to be $13,598.10 per month, regardless of cumulative years of service computed under section 205 of title 37, United States Code. Nevertheless, actual basic pay for these officers is limited to the rate of basic pay for level III of the Executive Schedule, which is $11,516.70 per month.

*** Does not apply to commissioned officers who have been credited with over 4 years of active duty service as an enlisted member or warrant officer.

SCHEDULE 8-PAY OF THE UNIFORMED SERVICES (PAGE 2)

YEARS OF SERVICE (COMPUTED UNDER 37 U.S.C. 205)

Pay 2 or Over Over Over Over Over Over Over Over Over Over Over Over Over OverGrade less 2 3 4 6 8 10 12 14 16 18 20 22 24 26

* For noncommissioned officers serving as Sergeant Major of the Army, Master Chief Petty Officer of the Navy or Coast Guard, Chief Master Sergeant of the Air Force, or Sergeant Major of the Marine Corps, basic pay for this grade is $5,382.90 per month, regardless of cumulative years of service under section 205 of title 37, United States Code.

** Applies to personnel who have served 4 months or more on active duty.

*** Applies to personnel who have served less than 4 months on active duty.

SCHEDULE 8-PAY OF THE UNIFORMED SERVICES (PAGE 3)

Part II-RATE OF MONTHLY CADET OR MIDSHIPMAN PAY

The rate of monthly cadet or midshipman pay authorized by section 203(c)of title 37, United States Code, is $734.10.

Note: As a result of the enactment of sections 602-694 of Public Law 105-85,the National Defense Authorization Act for Fiscal Year 1998, the Secretary of Defense now has the authority to adjust the rates of basic allowances forsubsistence and housing. Therefore, these allowances are no longer adjustedby the President in conjunction with the adjustment of basic pay for membersof the uniformed services. Accordingly, the tables of allowances included inprevious orders are not included here.

SCHEDULE 9--LOCALITY-BASED COMPARABILITY PAYMENTS

(Effective on the first day of the first applicable pay periodbeginning on or after January 1, 2002)

This chart provides an example of how the 2002 locality rate and net increase is computed for an employee in the Rest of U.S. locality pay area. The example is for a GS-9 step 1 employee. The example shows that the GS-9 step 1 basic rate increases from $33,254 in 2001 to $34,451 in 2002 as a result of the 3.6 percent general basic pay increase. To derive the new locality rate, increase the GS-9 step 1 basic rate of $34,451 by the 2002 Rest of U.S. locality pay percentage of 8.64 percent. The resulting 2002 locality rate is $37,428. Compare the 2002 locality rate of $37,428 to the 2001 locality rate of $35,808. (The 2001 locality rate was derived by increasing the GS-9 step 1 basic rate of $33,254 by 7.68 percent.) The net increase in the locality rate is 4.52 percent. Examples of January 2002 Pay ComputationsBelow are examples showing how various categories of employees will be affected by the January 2002 pay adjustments. Annual rates are shown. The annual rate providing the highest entitlement (shown in bold) is used to calculate the employee's hourly rate in biweekly pay computations. An hourly rate is computed by dividing the annual rate by 2,087 and rounding the result to the nearest cent. (Note: Firefighters compensated under 5 U.S.C. 5545b are subject to special pay computation rules, including the use of an hourly rate computed using a 2,756-hour divisor. See 5 CFR part 550, subpart M.)

1. General Schedule (GS) employee

Grade/step: GS-9, step 5Location: "Rest of U.S." pay area

2001 GS basic rate

2001 locality rate

$37,686

$40,580

($37,686 x 1.0768)

2002 GS basic rate

2002 locality rate

$39,043

$42,416

(after 3.6% general increase)

($39,043 x 1.0864)

2. GS employee promoted on same day that 2002 pay adjustments take effect